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Well sure, if you make your database case sensitive you risk breaking every line of code that touches it. :-) So, it depends. How faithful have your folks been about properly referring to columns, tables, etc. using their exact names as stored in the metadata vs. whether they could find their shift key that day?
– Aaron Bertrand♦Feb 22 at 17:57

I think changing the default collation is very tricky, and likely to cause all kinds of errors, so be very cautious. Why not change the Analysis services collation?
– George BarwoodFeb 22 at 18:08

There are quite a few areas that could be affected, and it depends greatly on if you are talking just about one particular database, or the instance and one or more of the databases on that instance.

HOWEVER, perhaps in addition to asking what might the affect of such a change be, you should probably also be asking the vendor:

Why they are making this recommendation? If they do not have a very specific reason for it, then maybe you shouldn't do it.

What is the specific recommendation: is it to make the instance case-sensitive, or just this particular database?

Is the vendor installing objects into an existing database, or do they create their own? If they create their own database, they can ensure that it is case-sensitive by setting the collation when the database is created. And if they are installing into an existing database, they can simply use the COLLATE clause in the CREATE TABLE statements to override the default from the database; they can use the COLLATE clause in any expression to override the database's default collation.

Why are they using obsolete SQL Server collations instead of the newer, more appropriate Windows collations? For anyone using SQL Server 2008 or newer , Latin1_General_100_CS_AS_SC would be the preferred equivalent of SQL_Latin1_General_CP1_CS_AS.